Memphis/Shelby County lead nation in transparency of business tax breaks

Memphis and Shelby County EDGE president Reid Dulberger unpacks boxes Friday inside EDGE's new offices at 100 Peabody Place. Dulberger is the first president of EDGE, which stands for Economic Development Growth Engine, a nonprofit organization designed to stimulate the local economy and create new jobs by attracting new businesses and assisting existing companies in growth.

Memphis/Shelby County and New York City lead the nation for the transparency of their programs that give tax breaks to companies in promoting economic development.

That's the finding of the research center Good Jobs First, which monitors the accountability of economic development programs.

Its announcement Thursday appears to affirm the early success of the new Economic Development Growth Engine for Memphis & Shelby County in attaining its goal to be among the most transparent economic development organizations in the nation.

EDGE, acting as the Memphis and Shelby County Industrial Development Board, can give property tax breaks to companies in return for firms either moving to Memphis or staying and expanding.

Memphis and Shelby County are among relatively few local governments so transparent in the tax subsidies given to companies, Good Jobs First found.

"I was surprised, honestly, by the level of sophistication and comprehensiveness which with EDGE was disclosing company-specific information about who in the region was benefiting from PILOT subsidies," said Leigh McIlvaine, research analyst and principal author of the Good Jobs First report. She referred to the tax breaks called PILOTs for payments in lieu of taxes.

"Going from the level of disclosure that was previously occurring under the organization that EDGE replaced, which was more rudimentary disclosure, to the data base EDGE is developing — and developing quickly — is an outstanding example for an organization that is pursuing real transparency."

The old Industrial Development Board was one of several economic development agencies consolidated and streamlined into the 18-month-old EDGE.

The study found that two-thirds of the subsidy programs run by the largest cities and counties do not use the web to report which companies are receiving tax breaks and other forms of financial help.

EDGE established its website, growth-engine.org, in February. It offers online more than 2,400 project files and details on more than 50 economic development finance programs and organizations. The website also lets companies apply online for PILOT tax breaks.

Good Jobs First, a Washington-based nonprofit organization, reviewed the openness in the nation's 25 largest cities and 25 largest counties, studying 64 subsidy programs in all.

Among them, just 21 — in 16 jurisdictions — report online the names of companies receiving financial help. Some of those programs even fail to disclose the costs and benefits of the subsidies.

"The best disclosure practices are in: Memphis/Shelby County, Tennessee; New York City; Austin, Texas; and Chicago," the report states. "These jurisdictions stand out for company-specific data with costs, benefits and more."

The nonprofit evaluated programs for disclosure on a 0-to-100 scale based on the inclusion of: basic information about the companies receiving benefits; subsidy comments; subsidy outcomes; user-friendliness; and accessibility. Three bonus categories could add points for the span of disclosure years, reporting outcomes in addition to job creation, and use of maps to show where companies are that received help.

Reid Dulberger, EDGE president, said last year as EDGE was establishing its online presence, "Our rationale for doing it is because it is the right thing to do. I know it sounds corny, but it's the right thing to do.

"It is our intent to provide much more information because we are a public entity with public information. Are people really going to sit there and look up a PILOT lease? Probably not, but they ought to be able to."

Memphis/Shelby County and New York City topped the list with 110 points each, followed by Austin with 100, Chicago, 97, and Detroit, 73.

The Downtown Memphis Commission scored a 55, which McIlvaine described as "about right in the middle" of the organizations studied.

Among 20 large local governments failing to disclose are Broward County (Fla.), Charlotte, Cook County (Ill.), Dallas, Harris County (Texas), Los Angeles, Miami-Dade County (Fla.), Philadelphia, and San Francisco.

"While a handful of cities enable taxpayers to see the costs and benefits of every deal, we were disappointed by the poor state of transparency in most major localities," McIlvaine, the report's principal author, said in a release.